Finding Humor in Entrepreneurship

Inappropriate Workplace sounds like the last thing a couple of UCLA Anderson grads want to be known for - unless they are Marc Campbell (’03) and classmate Daniel Granof (’03), two-thirds of the management team at the Independent Comedy Network (ICN, www.icn.tv) where you’ll find the online comedy program called - you guessed it - Inappropriate Workplace.

Independent Comedy Network is actually a very appropriate workplace for Campbell and Granof. Located on the Third Street Promenade in Santa Monica, California, ICN’s shares it’s home with the Westside Eclectic, the improv and comedy theater Campbell -- a former stand-up and improv comic -- established in 2006. The facility has a stage, green screen, production and editing bays and an office. Open and airy, but with a back alley entrance, the space lends both to comic creativity and practical business, while fostering an edgy sense that the next big thing might just be happening.

The pair met at Anderson when the former was ASA president and the latter editor of The Exchange. (Coincidently, both are graduates of Hamilton College in upstate New York, but never met as they were about five years apart in school.) They grew closer when Granof took an improvisation class at Anderson that was offered and taught by Campbell.

After graduation, they went their separate ways. Campbell worked for a while at mall punk retailer Hot Topic then with a private equity firm. Granof worked at E! Networks in program development, then spent two years with a mobile content startup, developing applications and mobile web sites for entertainment properties like Lost and Desperate Housewives. It was while working in private equity that Campbell established the Westside Eclectic comedy theater with his wife Ali (also Anderson ’03).

He also began to hatch the idea of an online comedy network.

The Independent Comedy Network is in many ways at the confluence of a number of new media trends, sitting at the center of a Venn diagram whose concentric circles include online content delivery services like YouTube, traditional media such as television networks, technology that enables the creation of content at a fraction of the cost it once did and Campbell and Granof’s comedy-slash-business acumen.

Put simply, as a business, ICN could not have existed five years ago.

“The thinking behind the Independent Comedy Network is that we’re building a portfolio of entertainment properties,” Campbell explained. “And each one of these properties starts as a five episode series on our network.”

“It’s important to realize that we’re not a destination web site,” Campbell explained. “We have a destination web site, but we’re looking to distribute our content as wide and as far as we can.” ICN currently has eighteen distribution partnerships, including Youtube, MySpace, iTunes, Joost, and even Hulu, the the premium content video site started by NBC Universal and NewsCorp.. In most cases, the partner sells ads with ICN participating in the revenue.

ICN’s first partner distribution partner was Joost. The story behind that partnership reads like a chapter out of the guerrilla-entrepreneur’s handbook:

“We had a total of about four videos that we had culled together and I sponsored a booth at the Digital Hollywood conference in Santa Monica, where we really had no business being,” Campbell said. “We went to the Apple store and bought two Macs and four iPods, because we knew we could return them and only pay a 10 percent re-stocking fee which was far less expensive than renting them.

“We just played our videos on a loop, hopefully giving the impression that we had a lot more content than we actually did. In the end, it got us our first distribution deal, with Joost, and we’ve been able to parlay that into a full network of partnerships.

The epilogue to the Joost deal was that ICN had to come up with ten hours of content in just five weeks to make it work. It became a crash course in content development and licensing agreements - which Campbell says is exactly what they needed at that time.

Technically speaking, ICN owns the Westside Eclectic. It’s a synergistic relationship, as the classes and shows give Campbell and Granof access and exposure to comedic talent, enabling them to create the video content for ICN.

The first phase of the business strategy was to build a content development engine and to secure distribution partnerships. Now, with nearly 3 million total views since launching in February, the second phase is brand-building for the more popular shows. “We launch these shows with five episodes and then we see what happens,” Campbell said. “The ones that are the most popular we extend for a second season and look to bring on brand sponsors for product integrations, product placements, and “brought to you by” sponsorships. That’s the phase that we’re in now. Two of our shows have been extended to a second season, and we recently closed a deal with Viacom to exclusively distribute one of them on Atom.com.” (The shows are 2/8 Life and Inappropriate Workplace.”)

In addition to seeking sponsorship for their shows, they are currently in the market to raise a Series A venture capital round. One ultimate goal is to migrate ICN’s entertainment properties to television or films. With up to thirty original shows planned for 2008, the company will end up with a portfolio of properties with a goal that the most successful ones getting TV or film deals, with accompanying merchandising and other potential revenue streams.

None of this would have been possible in the era when only large companies with deep pockets could produce films or television pilots.

“Actually that was something I examined for an independent study one quarter at Anderson,” Granof said. “It ended up being a case study for Professor (Olav) Sorenson’s entertainment strategy class. I researched the vertical integration that occurred in network television from the mid-90s through 2003.

“What happened was the studios, because of deregulation, could all of a sudden start owning the television networks. And once they could own the networks, it meant that they could control the process from a show’s development all the way through to syndication and where the big dollars are. That really started squeezing out a lot of the independent producers.

“The development system has evolved to where they are spending literally two million dollars on one pilot and they are doing 15 pilots per season. Now that’s a lot of money to be spending, and most of them aren’t going to make it to the air, and then the ones that do make it to the air, most of those won’t last very long.”

But new technology has put content creation in the hands of the people - entrepreneurs, really - and has given the large media companies new avenues to seek out content.

“Online distribution is much easier, and this talent is now out there creating stuff on their own,” Campbell said. “We’ve positioned ourselves as a business partner to that talent. So some of the shows we’ll source ourselves and create completely on our own. On the other end of the spectrum, we’ve got partners who may produce shows completely independently and come to us to distribute and to further build out that property.”

“We make shows, we try out ideas for a lot less than the studios,” he Granof added, laughing. ”We have a way to prove the idea and maybe get a few hundred thousand or a million viewers, and now a big company has something that they can bank on if they are trying to turn that property into a TV show.”

How the new paradigms play out remains to be seen. Viewers habits are changing and they are changing differently across generational lines. Kids today will watch movies on a three inch video game screen, a screen so small their parents can’t even see it without reaching for their reading glasses. How exactly content creators and distributors meet the evolving needs of their customers is a script not yet written. However it plays out, Campbell and Granof are relishing their role in the revolution.

“I’m having a blast,” Granof said. “This was the perfect opportunity for me, because I’m very analytical but I also love this industry. Campbell echoed the sentiment: “It’s really very exciting. We have classmates telling us they’re jealous. We’re very lucky.”